Q3 08 Financial ResultsConference Call Presentation

November 5th, 2008

Disclaimer

Forward-looking statements are based on the beliefs and assumptions of

Arauco’s management and on information currently available to the Company. They involve risks, uncertainties and assumptions because they relate to future

events and therefore depend on circumstances that may or may not occur in

the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future

results of Arauco and could cause results to differ materially from those

expressed in such forward-looking statements.

2

• The Company

• Q3 08 Highlights

• Financial Review

• Outlook

Contents

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9 plants538 MWSurplus:134 MW

Pulp PanelsForestry Sawn timber

5 mills

2.7 million tons

12 sawmills

2.92 million m3

721,799 hectares

(1.8 million acres)

4 facilities

Plywood: 805 Th m3

MDF: 520 Th m3

Hardboard: 60 Th.m3

2 sawmills

470,000 m3

119,632 hectares

(295.6 Th acres)

6 mills3.0 million tons

14 sawmills3.39 million m 3

8 facilities2.56 million m3

1 mill

350 Th. tons2 facilities

MDF: 305 Th m3

PB : 260 Th m3

931,721 hectares(2.3 million acres)

63,724 hectares

(157.5 Th acres)2 facilities

MDF: 305 Th. m3

PB : 300 Th m3

26,565 hectares

(65.6 Th acres)

Arauco’s main businesses

9 plants

538 MW

Surplus: 134 MW

Energy

Paraguay

Bolivia

Peru

Venezuela

Guyana

SurinameFrenchGuyana

BRASIL

Colombia

Ecuador

Constitución

Paraguay

Uruguay

CHILE

Santiago

AraucoCholguán

ARGENTINA

Buenos Aires

AltoParaná

N.Aldea

Saw Mill

Forests

Pulp Mill

Head Offices

Panel mill

Peru

Colombia

4

1 sawmill (*)

250,000 m3

(*) Temporarly Closed

Highlights of Q3 08

• Revenues of MMUS$ 975 ( + 10.2% over Q3 2007 / - 3.3% over Q2 2008)

• EBITDA of MMUS$ 286 ( - 15.1% over Q3 2007 / - 18.6% over Q2 2008)

• Net Income of MMUS$ 130 (- 25.5% over Q3 2007 / - 21.8% over Q2 2008)

• Arauco registered two local bonds lines in Chile for a maximum of 10 million UF.

• Impact Study Declaration for the construction in Constitución, Chile of a cogeneration plant (US$105 million Capex) fuelled by forestry biomass.

• Shut down of the Lomas Coloradas Sawmill, with a capacity of 250.000 m3 per year (Sep. 30).

5

(MMUS$) Q3 07 Q2 08 Q3 08Chg (%)

Q308/Q307Chg (%)

Q308/Q208

Net Sales 885 1.009 975 10% -3%

Operating income 253 255 200 -21% -22%

EBITDA 337 351 286 -15% -19%EBITDA Margin 38,1% 34,8% 29,3%

Non-operating income -28 -41 -48 73% 19%Interest expense -42 -44 -33 -22% -26%

Foreign exchange gains (losses) 5 -10 -19 -471% 86%

Other non-operating income 9 14 4 -56% -73%

Income taxes -51 -48 -23 -55% -52%

Net Income 175 167 130 -26% -22%

Financial Review - Consolidated Income Statement- (Quarterly)

Income Statement

6

Financial Review – Pulp Markets during Q3

• Global Pulp market started to deteriorate in Septem ber

– Weak demand (economic slowdown)

– Strong US$

• Some producers refused to lower prices

• Sales volume went down

– Buyers with expectations of lower prices

– Other competitors 20-30% lower volume QoQ

– Arauco 5% down

• Shipping of pulp continued, specially to Asia

– Inventories at Asian ports went up drastically

Q3 07 Q2 08 Q3 08Chg (%)

Q308/Q307Chg (%)

Q308/Q208

Pulp 429 526 480 12% -9%Sawn Timber 206 191 192 -7% 0%Panels 224 248 240 7% -3%Forestry 20 17 30 52% 79%Others 6 26 33 469% 26%Total Sales 885 1.009 975 10% -3%

Financial Review - Consolidated Income Statement- (Quarterly)

Net Sales

7

Chg (%) Q308/Q307Price

Sales Volume

Pulp 3% 9%Sawn Timber 1% -8%Panels 13% -5%

Chg (%) Q308/Q208Price

Sales Volume

Pulp -4% -5%Sawn Timber 8% -7%Panels -2% -1%

• Pulp: Decrease in pulp prices due to weaker demand and oversupply that affected all markets.

• Sawn Timber: Higher average prices in our remanufactures wood products due to a reduction in the supply explained by the exit from the market of uncompetitive producers.

• Panels: Demand for Plywood remained high. In the case of European markets we faced a reduction in our margins due to the devaluation of the Euro.

(MMUS$) Q3 07 Q2 08 Q3 08Chg (%)

Q308/Q307Chg (%)

Q308/Q208

Net Sales 885 1.009 975 10% -3%Cost of sales -469 -561 -589 26% 5%Selling and administrative expenses -162 -192 -186 15% -3%

Operating income 253 255 200 -21% -22%Operating margin 28,6% 25,3% 20,5%

Financial Review - Consolidated Income Statement- (Quarterly)

Operating Income

Q308 vs. Q307

• Increase in unit cost of pulp, explained

by higher costs of wood and chemicals.

• Higher unit cost of MDF Panels

(Resins and wood) and Plywood

(wood)

Q308 vs. Q208

• Lower unit cost of pulp due to

depreciation of Chilean peso and lower costs of chemicals.

• Higher unit cost of MDF Panels

(Resins)

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(MMUS$) Q3 07 Q2 08 Q3 08Chg (%)

Q308/Q307Chg (%)

Q308/Q208

Cash flow from operating activities 234 201 287 23% 42%

Cash flow from financing activities -108 -128 -135 26% 5 % Dividends Paid 0 -197 0 Bonds Issued -2 0 0 Bonds Paid 0 0 0 Long Term Loans Issued 0 0 0 Long Term Loans Paid 0 0 0 Short-Term Loans Issued (Paid) -109 69 -135 Others 4 0 0

Cash flow from investment activities -96 -119 -150 56% 2 6% Capex Pulp -44 -49 -52 Sawn timber -3 -8 -10 Panels -16 -13 -19 Forestry -34 -50 -62 Others 1 1 -7

Net total positive (negative) cash flow 30 -47 1 -95% -1 03%

Financial Review - Consolidated Cash Flow - (Quarterly)Cash Flow

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US$ million Q3 07 Q2 08 Q3 08Chg (%)

Q308/Q307Chg (%)

Q308/Q208

Short term Debt 60 289 240 303% -17%Short-term portion of long-term debt 221 209 296 34% 41%Long term financial debt 2.031 2.150 1.969 -3% -8%

TOTAL FINANCIAL DEBT 2.312 2.649 2.504 8% -5%

Cash & equivalents 247 289 279 13% -3%

NET FINANCIAL DEBT 2.065 2.360 2.225 8% -6%

Financial Review - Consolidated Debt

10

0

166

100

5

271

24

387

48 48

300

48 48

370

24

395

0

50

100

150

200

250

300

350

400

450

U.S

.$ m

illio

n

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Long Term Debt Amortization

Bank Loans Bonds

Financial Review – Financial Ratios

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Profitability Q3 07 Q2 08 Q3 08Gross margin 46,9% 44,4% 39,5%

Operating margin 28,6% 25,3% 20,5%

EBITDA margin 38,1% 34,8% 29,3%

ROA (EBIT / Average Total Assets) 12,7% 11,5% 9,0%

ROCE (EBIT (1 - tax rate) / Average Total Capitalization) 10,7% 9,8% 8,4%

ROE (Net Income / Average Equity) 14,1% 12,1% 9,5%

Leverage Q3 07 Q2 08 Q3 08Interest Coverage Ratio (EBITDA / Net Interest) 8,7x 9,5x 10,1x

Interest Coverage Ratio (EBITDA / Gross Interest) 8,1x 7,9x 8,7x

Average Net Financial Debt / EBITDA 1,6x 1,7x 1,9x

Total financial debt / Total Capitalization 31,5% 32,6% 31,1%

Net financial debt / Total Capitalization 28,1% 29,1% 27,6%

Total financial debt / Equity 45,9% 48,5% 45,2%

Net financial debt / Equity 41,0% 43,2% 40,1%

Outlook – Pulp Market

• Global Pulp market showing more signs of weakening:

– Weak demand – Paper market suffering from economic slowdown

– Low operating rates, high inventories of paper

– Strong US$

– Increase in inventories of pulp (more critical in h ardwood)

• For some producers in Canada, Europe and Asia, pric es have already fallen down the level of their cash production cost s.

• However, many producers in these regions have benef ited from thestrengthening of the dollar.

• Downtime response has been slow to materialize, new projects being postponed

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NBSK

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US$ EUR CAD CLP

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US$ EUR CAD BRL CLP

Outlook – Sawn Timber Market

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• The U.S Housing and Construction Market is still we ak.

– The construction of houses is still decreasing, rea ching levels of 800.000 of houses per year, compared with 2 million of houses per year, two years ago

– It’s expected that this situation will continue dur ing part of 2009

– Arauco increasing its market share for moldings in USA

• The economic slowdown is starting to affect the dem and for Panels

– MDF Moldings down in USA, selling more panels in As ia

– MDF, HB and PBO with healthy demand in Latam

– Sales to Europe in Euros affected by exchange rate

– Plywood prices stable

Outlook – Panel Market

Q & A

15

Q3 08 Financial ResultsConference Call Presentation

November 5, 2008

Visit www.arauco.cl for more information

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